Strategy's Capital Structure: From Senior Debt to Common Stock — and Where STRC Fits

Strategy has issued so many different securities that you almost need a map to keep them straight — $6.7 billion of convertible bonds, five separate preferred series, and the MSTR common stock everyone knows. What surprised me when I first plotted STRC onto that map is how high it sits: second from the top of the preferred tier, with only STRF ranked above it. For an instrument paying 11.5%, that's an unusually senior seat — and it's the fact that frames everything else about STRC.

Strategy isn't really a software company any more; it's a leveraged machine for buying Bitcoin, and the stack of debt and equity it has built is the engine. Where STRC fits in that stack tells you both how protected your income is and why the rate is set where it is. So it's worth walking the stack from the top down — the same order Strategy's assets would actually be handed out in if things ever went wrong.

Top of the stack: $6.7 billion of convertible debt

Debt always gets paid first, and Strategy's sits right at the top: roughly $6.7 billion in convertible senior notes as of May 2026, issued to institutions across several tranches and maturities. A number of those pay 0% interest — the lenders aren't in it for the coupon, they're in it for the conversion right, the option to swap the bond into MSTR common stock at a pre-set price.

What matters for a STRC holder is the priority. Those notes rank ahead of every equity holder in the business — preferred and common alike. In a wind-up, bondholders have first claim on Strategy's assets, including its 843,000-plus Bitcoin, before a single preferred dividend is considered. The near-zero-coupon structure is deliberate: Strategy borrows cheaply to buy Bitcoin and bets the appreciation outruns any dilution when those bonds convert. That bet shapes everything sitting beneath it — STRC included.

The preferred tier: five series, not one

Below the debt and above MSTR common sits the preferred tier — and this is where people tend to lump everything together as "Strategy preferred" when it's actually five distinct series, around $15.5 billion of notional between them. They all rank ahead of common stock, but they don't rank equally with each other. Seniority within the tier runs in a set order, and STRC sits near the top of it.

STRF — the most senior (10% fixed, quarterly). STRF sits at the very top of the preferred hierarchy, which makes it the most protected of the five. It pays a fixed 10% a year in quarterly cash of $2.50 a share, and ranks ahead of every other series if Strategy ever had to trim or suspend dividends.

STRC — second most senior (currently 11.50%, monthly). STRC is the one I track on this site, and it sits immediately below STRF — only that one series ranks above it. It launched in July 2025 at 9% and has stepped up almost every month since, reaching 11.50%, or about $0.958 a share each month. The rate resets monthly to keep the price near its $100 par: drift below par and the rate rises to pull buyers in; drift above and it eases off. No conversion feature, no maturity date — just monthly cash. A near-top seat in the stack, monthly income and that self-correcting rate are exactly why STRC has become the series that draws the most money. Strategy's own prospectus spells the ranking out:

STRE — the euro series (10% fixed, quarterly). STRE is Strategy's only non-dollar preferred — denominated in euros at €100 a share, built to tap European capital and listed on the Luxembourg Stock Exchange's Euro MTF market rather than Nasdaq. The 10% dividend pays quarterly in euros, and the raise came in at €620 million, upsized from €350 million on strong demand. It's open only to professional and institutional investors in the European Economic Area — not retail, and not the UK. In the stack it sits below STRC and above STRK and STRD.

STRK — the convertible (below STRE). STRK is the only convertible preferred in the lineup. Each share converts into 0.1 of an MSTR share, so holders get a slice of Strategy's equity upside alongside the income — at the cost of sitting lower in the preferred order. It's a genuinely different animal from the others: part fixed income, part equity option.

STRD — the most junior (8% stated). STRD sits at the bottom of the preferred tier, just above common stock, with the lowest stated rate of the five at 8%. Because it's last in line within the tier, buyers demand more compensation, and it often trades below its $100 par — which pushes its effective yield well above the stated 8%.

The bottom: MSTR common stock

Right at the bottom sits MSTR, the common stock. Common holders absorb losses first and get paid last, with no priority claim on dividends or assets — in trouble, they get whatever is left after every creditor and every preferred holder has been satisfied. The flip side is that all the uncapped upside is theirs: if Bitcoin runs and every senior obligation is met, the residual value flows to MSTR. That's the core trade in any capital structure — MSTR carries the most risk and the most reward; STRC sits well above it with a contractual income stream and a $100 par anchor, but gives up that open-ended upside in return. Which seat suits you comes down to whether you're buying for income or for growth.

The stack at a glance

Top to bottom, it lines up like this:

1. Convertible senior notes — ~$6.7B of debt; paid first in every scenario
2. STRF — most senior preferred; 10% fixed; quarterly USD
3. STRC — second most senior preferred; 11.50% adjustable; monthly USD
4. STRE — euro-denominated preferred; 10% fixed; quarterly EUR; EEA professionals only
5. STRK — convertible preferred; equity upside via MSTR conversion
6. STRD — most junior preferred; 8% stated; just above common
7. MSTR common stock — absorbs losses first; uncapped upside

Why STRC has pulled ahead of the other four

Of the five series, STRC has become the standout by almost any measure I look at. By mid-2026 it had scaled to a $6.4 billion market cap, with Strategy raising $5.6 billion of STRC in the first half of the year alone. Daily volume regularly tops $375 million — one of the most liquid preferreds in the US market — and its 30-day volatility has fallen to about 1.7%, remarkably calm for anything with Bitcoin behind it. A few things explain the pull:

• Seniority and yield together — it's the second most senior preferred, ranked just below STRF, yet it pays more than any of them. Near-top-tier protection with a rate that's climbed to 11.50% is a rare pairing.
• Monthly, not quarterly — every other series pays quarterly; STRC pays every month, which suits anyone buying for regular income rather than waiting 90 days between cheques.
• The self-correcting rate — the monthly reset keeps STRC pinned near $100 par, which has held its price unusually steady and makes it behave more like a cash instrument than a typical preferred.
• A real cash buffer — Strategy has set aside $1.1 billion specifically for dividend and interest obligations, a concrete cushion between STRC holders and any dividend disruption.
• A track record — about $413 million distributed since the July 2025 launch, paid month after month.

That mix — seniority, monthly income, price stability and deep liquidity — is why I'd call STRC the benchmark for this young digital-credit asset class, not just the biggest of Strategy's preferreds.

What it means if you hold STRC

• Second most senior preferred — only STRF ranks above it; four of the five series, including the convertible STRK and the junior STRD, sit below. That's a genuinely protected spot inside a complex, well-capitalised structure.
• Senior to common — STRC dividends have to be dealt with before MSTR holders see anything, which is real protection relative to owning MSTR outright.
• Junior to all the debt — the $6.7 billion of convertibles ranks ahead of STRC in every scenario; under severe stress, debt gets serviced before any preferred dividend.
• Bitcoin is the thing underneath it all — the whole stack ultimately leans on Strategy's 843,000-plus Bitcoin. A sustained drop in Bitcoin presses on the stack from the bottom up, starting with MSTR and working towards the preferred tier over time.

So why the yield premium

STRC's 11.50% is well above the 5–7% a conventional preferred tends to pay, and the structure above explains exactly why. You're taking on Bitcoin's price path through Strategy's balance sheet, sitting below $6.7 billion of senior debt, and holding a perpetual instrument with no guaranteed return of capital. But inside the preferred tier itself STRC holds a strong hand — second only to STRF — and its liquidity, monthly payments and $1.1 billion reserve make it the most developed and investor-friendly of the five. The way I read it, the rate isn't a distress signal; it's the price of a clearly-defined risk that's simply different from an ordinary preferred. Whether that trade suits you is a judgement only you can make — but you can't make it well without first understanding the stack. To see STRC against the other obvious option, I put the two head to head in STRC vs SATA; for the opposite approach to financing entirely — no debt at all — there's Strive's capital structure. The live STRC numbers are on the STRC hub.

I track STRC and SATA daily and hold positions in their parent issuers (MSTR and ASST). Mapping the stack the way I have here is how I personally weigh STRC — it isn't financial advice.

This article is for educational purposes only and does not constitute financial advice. Capital structure details are based on publicly available information as of June 2026 and are subject to change. Always consult a qualified financial adviser before making investment decisions.